Wednesday, December 3, 2008

Den of Vipers and Thieves

I was reading Charles Hugh Smith's blog Of Two Minds, which is a daily read for me and which most certainly should be of yours as well. In his post today, Starvation and a Quiet Revolution, Charles wrote the following;

"How about we re-write the playbook and make the debt-serfs players instead of passive observers. How about we have the debt-serfs slowly strangling the political power of bankers by refusing to play debt-serf any longer.

How do you refuse to be a debt-serf? By refusing to borrow money. It's really that simple.

What happens when people stop increasing their credit card debt, stop getting auto loans and stop signing mortgages? The income of banks plummets, and thus so does their ability to purchase political power."

Here ! here ! Charles. Well put. As Charles usually does, he got me to thinking about our current predicament given all that has, is and will continue to transpire with the banks, insurers, bank holding companies, and about to be newly coined banks. I remembered reading a quote that I thought quite fitting given his comments. So after some digging I finally located it. It comes from the 7th President of the United States, Andrew Jackson speaking about the bankers of the day, the 1830's I believe;

"Gentleman, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in thebreadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families andtha will be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out. "

From the sounds of this quote, things haven't changed much in the world of finance since the early 1800's. One could post this in the NY Times or Washington Post think it was in reference toPaulson, Lewis, Raines, Blankfein, Mack, O'Neal, Thain et al.

Continuing on in this vein, an old colleague (thx Jeremy) sent me an email with a link to a recent article in Conde Naste by Michael Lewis, the author of the popular book Liar's Poker. The article entitled The End, is definitely worth the read, especially for this those still wondering if the market has discounted all the bad news and also whether or not former President Jackson was right in that they are all a den of vipers and thieves.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

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